What is man?s greatest invention?
Some of the latest gizmos would immediately crop up in our minds as the most
probable of the answers. But do these gizmos really deserve the veneration that
they receive. True, they have revolutionized lives. But they have been
characterized with impermanence. Another new invention and the earlier invention
is nowhere to be seen.
One invention of man which has withstood the challenges of time is a home.
The earlier users of home might have constructed it just for shelter purposes.
But it has assumed new roles in a person?s life. Besides providing shelter, it
has become an indispensable status symbol. Home has continued adopting new
fashions and styles, and thus still holds the same esteemed position that it
held in the primitive ages.
People revere their houses, and would think twice before taking any step
which imperils its existence. Since secured loans entail keeping home as
collateral, most people who value their houses would dread taking the loan. A
single default may lead to ones house being repossessed. And with this all
dreams which the customer and his/ her spouse may have dreamt with their home as
a scenic backdrop fades forever.
This single fact has led a large number of people, including those who do not
have the luxury of homes, to look for different options, in spite of secured
loans offering a much better rate of interest.
?All that is gold does not glitter; not all those that wander are lost?. So
said J.R.R.Tolkien, an English novelist and scholar. Going by the logic it would
be unprofessional to not cater to the vast population who do not want to keep
their homes to any kind of obligation, or who do not have a home in the first
place, on the grounds that they can cause default in payments.
To fill up this vacuum and to cater to this vast population which was till
yet unsatisfied or was debarred from the credit process at the very initial
stages because of the absence of home, the concept of unsecured loans was
launched.
So what is an unsecured loan? An Unsecured loan is a loan for those who do
not take a secured loan. The lender provides the loan without having to keep any
collateral. The loan provider in this case has more risk to bear. He doesn?t
have the cushion of home or property to meet the contingencies like constant
default. So he would counter it through a higher rate of interest. But customers
who desire to keep their homes safe will bear the high interest rate without
flinching. The interest rates may be slightly higher than what is charged for
secured loans. One doesn?t have to rely on the high street lenders who charge a
very high rate. There are many reputable lenders who may offer the most desired
terms.
Unsecured loans are very fast in being approved. The lender doesn?t need to
value the worth of the customers? property, which is the most time consuming
process. The result is fast cash for the customers to benefit from.
Since there is no collateral involved in the process, lenders would dread
offering loans to those who have a bad credit history. The denial extends even
to those who have received County Court Judgements or Individual Voluntary
Agreements. But there are lenders who will happily take the risk; of course
charging a higher rate of interest for their services.
Taking out an unsecured loan doesn?t give one a license to default. The
lender can take actions to make good his defaults. While in the case of secured
loans the lender would have immediately covered the defaults through liquidation
of the collateral; in unsecured loans they would have to take the help of the
court, which ultimately results in repossession of the home.
Such court proceedings can result into the customer?s name being entered on
the defaulters list with the credit agencies for around 6 years. And in these 6
years a person won?t be able to get loans as lenders perceive the customer as
precarious or bound to default. This would certainly be a very complicated
scenario since a person does need loan to meet contingencies.
To skip such a scenario one would have to be very cautious right from the
time when one plans the loan. The following checklist would be of immense
help:
Decide what amount you really require.
Select the lender.
Decide the
amount to be repaid monthly.
Make an optimum balance between the ultimate
cost of the loan and the monthly repayments.
Make an optimum balance between
the amount of monthly repayments and their number.
Be regular in
repayments.
With these points in place one can really enjoy the most out of the unsecured
loan and rest assured as to the safety of his home.
